Cap and Trade Returns From the Grave

The president's plans for "clean energy standards" amount to carbon controls by other means.

By

Kimberley A. Strassel

Updated Jan. 28, 2011 12:01 a.m. ET

Cap and trade is dead. Long live cap and trade.

The president presented his new, conciliatory face to the nation this week, and his State of the Union was as notable for what it didn't include as what it did. He uttered not one word about global warming, a comprehensive climate bill, or his regulatory attempts to reduce carbon. Combined with his decision to give the axe to controversial climate czar Carol Browner, political analysts took all this as further proof that Barack Obama was moving to the middle, making nice with Republicans.

Snort. Guffaw. Chortle.

Listen carefully to Mr. Obama's speech and you realize he spent plenty of it on carbon controls. He just used a different vocabulary. If the president can't get carbon restrictions via cap and trade, he'll get them instead with his new proposal for a "clean energy" standard. Clean energy, after all, sounds better to the public ear, and he might just be able to lure, or snooker, some Republicans into going along.

The official end of cap and trade, and Mrs. Browner, wasn't conciliation—it was necessity. The public now understands that cap and trade is an economy killer, and no small number of Democrats lost their seats in midterms for supporting it. Few in the party want to take it up again, and House Republicans won't let it pass. Mr. Obama would be crazy to continue calling for it.

Mrs. Browner, for her part, had become a political liability. As czar, she's had sweeping control over administration policy—all of it unaccountable. This worked under a Democratic Congress, but House Republicans had made clear they intended to call her to testify. This had the makings of an ugly fight over executive privilege and would have forced the White House to defend a lack of transparency. Better to let the lightning rod go.

But Mr. Obama has no intention of letting go of his carbon-free world. He instead went to plan B. Specifically, he called in his speech for the nation to "join" him in a "new goal: by 2035, 80% of America's electricity will come from clean energy sources." What the president was in essence calling for—in happier, fuzzier, broader language—is what policy wonks refer to as a "renewable portfolio standard." This is a government mandate requiring that utilities produce annually a specific amount of their electricity from renewable sources—wind, solar, biofuels.

ENLARGE

House Energy Chairman Fred Upton is wise to the president's strategy.
Associated Press

It's also cap and trade by another name. Consider: The goal of cap and trade is to impose crushing taxes on fossil fuels—oil, coal, natural gas—thereby forcing utilities to switch to costly renewables. Under Mr. Obama's new proposal, the government skips the tax part and outright requires the use of costly renewables. The result is the same: dramatically higher energy prices, from carbon-free sources. Now you know why even climate warrior John Kerry was so sanguine about the president's failure to say "climate change" in his speech. "I'm very sympathetic," said the Massachusetts senator, who clearly got the strategy memo.

Many Republicans understand the situation. Michigan Rep. Fred Upton, chair of House Energy and Commerce, put out a statement following the speech that insisted "the answer is not to hyper-subsidize preferred industries or to force consumers and job creators to purchase energy they can't afford." Reached on the phone, Mr. Upton elaborated, telling me the president's remarks "smell like cap and trade all over again." He noted that 28 states already have their own renewable standards and so "why have a federal mandate?"

Then again, some Republicans—the self-styled energy progressives—have let it be known they'd be open to a new government diktat, if only the price is right. South Carolina Sen. Lindsey Graham has noodled with legislation to require an energy standard that includes nuclear energy (like that produced in his home state) along with renewables. Indiana Sen. Dick Lugar has floated what he calls a "diverse" energy standard that would mandate renewables, nuclear and . . . coal with carbon sequestration. (Indiana relies on coal.)

This is why Mr. Obama took care in his speech to refer broadly to a "clean energy" standard and make clear he was open to including in it "nuclear" and "clean coal"—along with renewables. He'll lure Republicans into negotiations, then cement their support with lavish energy pork for their home-state nuclear, clean-coal, wind, biofuels and solar projects. As a bonus, the plan gives cover to nervous coal state Democrats.

What the White House also knows—as do most sensible people—is that these promises mean little. The president has made grand nuclear gestures, but his regulators continue to sit on projects. Clean coal remains a pipe dream. Here's to betting that if and when the president's "clean energy" standard kicks in, the only mandated sources utilities have to choose from are wind, solar and biofuels.

The GOP has spent some long, sometimes uncomfortable, years explaining the perils of cap and trade. Yet they risk getting the same policy, all because they've yet to find the moxy to resist the "clean energy" drumbeat.

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